Biovail Reports Fourth Quarter, Year-End 2004 Financial Results

Biovail Reports Fourth Quarter, Year-End 2004 Financial Results

    Business Editors

    TORONTO--(BUSINESS WIRE)--March 10, 2005--

Company Achieves Record Revenues of $277.9 Million for Fourth Quarter and $886.5 Million for Year Ended December 31, 2004; Fourth-Quarter GAAP EPS of $0.29

    Biovail Corporation (NYSE:BVF)(TSX:BVF) today announced financial results for the three-month and 12-month periods ending December 31, 2004.
    Total revenues for the three months ended December 31, 2004 were $277.9 million, compared with $199.7 million for the fourth quarter of 2003, an increase of 39%. Total revenues for the 12 months ended December 31, 2004 were $886.5 million, compared with $823.7 million for 2003, an increase of 8%.
    Fourth-quarter 2004 net income, in accordance with United States Generally Accepted Accounting Principles (GAAP), was $46.0 million, compared with a net loss of $96.0-million for the corresponding 2003 period. Net income for the year ended December 31, 2004 was $161.0 million, compared with a $27.3-million net loss in 2003. GAAP diluted earnings per share (EPS) for the fourth quarter of 2004 were $0.29, versus a $0.60 diluted loss per share for the fourth quarter of 2003. In 2004, GAAP diluted EPS was $1.01, compared with a diluted loss per share of $0.17 for the full year of 2003.
    "Biovail's record fourth-quarter revenues reflect the continued strength in Wellbutrin XL, and strong performance for Biovail's promoted products," said Biovail Chairman Eugene Melnyk. "With a significantly de-leveraged balance sheet and a new Strategic Plan close to implementation, Biovail will be better positioned to capitalize on its value-creating technologies and capabilities."
    Dr. Douglas Squires, Chief Executive Officer, said, "Our goal is to maximize shareholder value - more specifically, to increase the profitability of our U.S. business while maintaining a direct commercial presence that allows us both the flexibility and opportunity to create sustainable growth. At this time, we are actively evaluating various alternatives to better leverage our U.S. commercial organization. This is a top priority for Biovail. While it is difficult to predict the exact timing, we are working toward implementation in the next 30 to 60 days."
    Biovail today announced its revenues and earnings guidance for 2005 (see separate news release). The financial guidance presented today reflects the Company's strength in capitalizing on its drug-delivery technologies to develop and commercialize medications that offer clinically meaningful enhancements to existing medications.
    On March 3, 2005, the United States Securities and Exchange Commission (SEC) served a subpoena on the Company pursuant to a formal order of investigation related to an informal inquiry initiated in November 2003. The investigation relates primarily to a number of accounting and disclosure practices. Biovail has been fully co-operating with the SEC, and will continue to do so, in an effort to bring the investigation to a conclusion in an expeditious manner.

    Fourth-Quarter 2004, 2004 Full-Year Financial Performance

    Product sales for the fourth quarter of 2004 were a record $265.7 million, compared with $168.3 million in the fourth quarter of 2003, an increase of 58%. This solid performance is largely attributable to the ongoing success of Wellbutrin XL, Biovail's extended-release formulation of bupropion hydrochloride for the treatment of depression. In August, rapidly increasing sales for Wellbutrin XL moved Biovail into the third and highest tier of its pricing agreement with GlaxoSmithKline. Also contributing to the positive fourth-quarter performance was Biovail Pharmaceuticals Canada (BPC) and Biovail's portfolio of generic products.
    Product sales for the full year 2004 were $841.4 million, compared with $632.9 million for the comparable 12-month period in 2003, an increase of 33%. As a percentage of total corporate revenue, product sales were 96% and 95% in the fourth quarter and all of 2004, respectively, compared with 84% and 77% in the fourth quarter and full year 2003, respectively.
    Core products - more specifically, those that Biovail, or a distribution partner, is actively promoting (Cardizem LA, the Teveten line, the Zovirax line, BPC products and Wellbutrin XL) - generated revenues of $185.7 million in the fourth quarter of 2004 and $565.8 million for the full year, compared with $105.9 million and $322.5 million in the corresponding periods in 2003, an increase of 75% in both cases. Core products represented 67% of overall revenues in the fourth quarter of 2004, compared with 53% in the corresponding 2003 period, demonstrating continued organic growth in Biovail's core business. For the full year, core products represented 64% of overall revenues, compared with 39% for the full year 2003.
    Revenues for Wellbutrin XL were $109.7 million in the fourth quarter of 2004, compared with $48.6 million in the fourth quarter of 2003, as Wellbutrin XL continues to gain share in the U.S. anti-depressant market. For the full year 2004, Wellbutrin XL revenues were $317.3 million, compared with $64.9 million for 2003 (Wellbutrin XL was launched in September 2003). In December 2004, Wellbutrin XL captured 54.8% of the new prescriptions written for the Wellbutrin brand (including generics). During 2004, GlaxoSmithKline built its safety stock levels of Wellbutrin XL - both from a strategic perspective and in anticipation of Biovail shifting its manufacturing attention to once-daily tramadol in 2005.
    Revenues from Biovail's promoted products (Cardizem LA, Teveten, Teveten HCT, Zovirax Ointment and Zovirax Cream) were $46.3 million in the fourth quarter of 2004, compared with $33.8 million in the corresponding period in 2003, an increase of 37% largely attributable to Zovirax. For 2004, revenues from promoted products were $146.7 million, compared with $172.4 million for the corresponding period in 2003. This 15% decrease primarily reflects the impact of reduced wholesaler inventory levels in 2004. Importantly, Biovail has signed distribution service agreements (DSAs) with the three largest U.S. pharmaceutical wholesalers. Going forward, this initiative should allow for reported revenues to more closely track prescription trends. Total prescriptions for Biovail's promoted products increased 12% in the fourth quarter of 2004, compared with the fourth quarter of 2003, and increased 34% for 2004, compared with 2003.
    Cardizem LA generated revenues of $10.3 million in the fourth quarter of 2004, compared with $20.0 million for the corresponding period in 2003. The decrease reflects a reduction in wholesaler inventories for the product. For the 12 months ended December 31, 2004, revenues for Cardizem LA were $53.6 million, up 12% from the $47.7 million recorded in the same period in 2003 (Cardizem LA was launched in April 2003). Cardizem LA total prescription volume increased 30% for the fourth quarter of 2004 and 108% for the full year 2004, versus the comparable periods in 2003, as Cardizem LA continues to gain market share in the once-daily diltiazem market. Cardizem LA captured 8.2% of total prescription volume for the class in the fourth quarter of 2004, compared with 6.1% in the fourth quarter of 2003. In 2004, Cardizem LA's share of the once-daily diltiazem market increased 30.6%.
    Biovail's Teveten franchise (Teveten, Teveten HCT) generated revenues of $5.2 million in the fourth quarter of 2004, compared with $2.1 million in the prior year period. For 2004, revenues for the Teveten line were $17.6 million, compared with $22.2 million for the full year 2003. Total prescriptions for Biovail's Teveten line of products increased 21% in the fourth quarter of 2004 and 27% in the 2004, compared with the corresponding periods in 2003.
    Fourth-quarter 2004 revenues for Biovail's Zovirax line (Zovirax Cream and Zovirax Ointment) were $30.8 million, compared with $11.7 million in the prior-year period. Zovirax revenues for the year ended December 31, 2004, were $75.5 million, compared with $102.4 million for the comparable period in 2003. Total prescriptions for Zovirax decreased 4% in the fourth quarter of 2004 and 2% in the full year 2004, compared with the corresponding periods in 2003. In the fourth quarter of 2004, Zovirax Ointment and Zovirax Cream held a combined 64.8% share of the topical herpes market, an increase of 4.2 percentage points in market share versus fourth-quarter 2003 levels. However, the topical herpes market continued to lose share to oral formulations.
    Biovail Pharmaceuticals Canada (BPC) revenues were $29.7 million in the fourth quarter of 2004 and $101.9 million for the full year 2004, compared with $23.4 million and $85.2 million in the fourth quarter and full year 2003, respectively. The key performance drivers for BPC were Wellbutrin SR and Tiazac. Total prescription volume for Wellbutrin SR increased 22% in the fourth quarter of 2004, versus the comparable 2003 period. Total prescription volume for Tiazac increased 16% in the fourth quarter of 2004, compared with the same period in 2003. During the fourth quarter of 2004, Biovail started to ship quantities of Tiazac XC, its once-daily extended-release formulation of diltiazem for the treatment of hypertension. Tiazac XC was formally launched in Canada on January 25, 2005.
    Legacy products generated revenues of $36.9 million for the fourth quarter of 2004, compared with $36.4 million for the corresponding period in 2003. For the full-year 2004, Legacy products generated revenues of $125.9 million, compared with $208.9 million in the year-ago period. The decrease in 2004 revenues can be primarily attributed to expected year-over-year declines in total prescription volumes for these mature products. Other factors contributing to the decline include a reduction in wholesaler inventory levels, the genericization of Tiazac in April 2003 and the termination in August 2004 of the sub-licensing agreement for Cedax. In the fourth quarter of 2004, total prescription volume decreased 32%, relative to 2003 levels, which is generally in line with Biovail's expectations. Biovail also announced today that the Company's Board of Directors is in the process of evaluating a number of options to maximize the value of Biovail's Legacy products (see separate news release).
    Sales revenue for Biovail's generic products was $43.1 million in the fourth quarter of 2004, compared with $25.9 million in the fourth quarter of 2003, an increase of 66%. Generic product sales for the 12 months ended December 31, 2004, were $149.7 million, compared with $101.5 million for the comparable period in 2003, an increase of 47%. The increase in generic product sales was mainly due to strong sales of generic Adalat CC and Cardizem CD, the renegotiated agreement with our distribution partner Teva Pharmaceutical Inc., and the normalization of inventory levels at Teva.

    Product Sales Performance Summary

    The following table summarizes Biovail's product sales performance in the fourth quarter and full-year 2004 and 2003:

($000s) Q4/04 Q4/03 Growth 2004 2003 Growth Sales Sales Rate Sales Sales Rate ---------------------------------------------------------------------- Promoted Products 46,334 33,847 37% 146,676 172,418 (15%) Wellbutrin XL 109,715 48,636 126% 317,298 64,932 N/M Biovail Pharmaceuticals Canada 29,673 23,427 27% 101,865 85,197 20% ---------------------------------------------------------------------- Total Core Products 185,722 105,910 75% 565,839 322,547 75% Legacy Products 36,853 36,413 1% 125,932 208,860 (40%) Generics 43,104 25,946 66% 149,675 101,491 47% ---------------------------------------------------------------------- Total Product Sales 265,679 168,269 58% 841,446 632,898 33% ----------------------------------------------------------------------

    Total Prescription Volume Summary

    The following table summarizes total prescription volume in the fourth quarter and full-year 2004 and 2003:

(000s) Q4/04 Q4/03 Growth 2004 2003 Growth Total Rx Total Rx Rate Total Rx Total Rx Rate ---------------------------------------------------------------------- Promoted Products 872,796 776,592 12% 3,264,282 2,439,446 34% Wellbutrin XL 2,791,719 951,436 193% 9,450,855 984,498 N/M Biovail Pharmaceuticals Canada 804,341 763,808 5% 3,095,195 2,955,372 5% ---------------------------------------------------------------------- Total Core Products 4,468,856 2,491,836 79% 15,810,332 6,379,316 148% ---------------------------------------------------------------------- Legacy Products 688,129 1,012,040 (32%) 3,068,578 5,473,544 (44%) Generics 1,865,437 1,980,827 (6%) 7,600,178 8,290,023 (8%) ---------------------------------------------------------------------- Total Prescriptions 7,022,422 5,484,703 28% 26,479,088 20,142,883 31% ---------------------------------------------------------------------- Source: IMS

    Co-promotion, royalty and licensing revenue was $4.6 million and $24.6 million for the fourth quarter and full year 2004, compared with $28.0 million and $176.6 million in the corresponding periods in 2003, representing decreases of 84% and 86%, respectively. These declines primarily reflect the conclusion of Biovail's economic interest in the sales of a generic formulation of Prilosec (omeprazole), in addition to the termination of the co-promotion agreements for Wellbutrin SR in the United States in March 2003, and Celexa in Canada in December 2003.
    Cost of goods sold for the fourth quarter of 2004 was $65.3 million, compared with $50.6 million in the fourth quarter of 2003, an increase of 29%. Cost of goods sold for full-year 2004 was $228.3 million, compared with $139.5 million for the comparable 12-month period in 2003, an increase of 64%. The increase in cost of goods sold is primarily related to an increase in product sales revenues.
    Gross margins on product sales were 75% in the fourth quarter of 2004, compared with 70% in the fourth quarter of 2003, an increase that largely reflects the impact of higher volumes and supply pricing for Wellbutrin XL in the fourth quarter of 2004. Gross margins for full-year 2004 were 73%, down from the 78% realized in 2003, which was favorably impacted by the recognition of a $25.5-million cumulative reduction in the Zovirax supply price.
    Research-and-development expenditures for the fourth quarter of 2004 were $19.0 million, compared with $26.1 million for the fourth quarter of 2003. Research and development expenditures for all of 2004 were $70.5 million, compared with $86.6 million for the comparable 12-month period in 2003. The decreases in 2004 reflect the culmination of certain high-cost clinical trials that were ongoing during 2003, versus conducting numerous earlier-stage, lower-cost programs during 2004.

    Selling, General and Administrative Expenses

    Selling, general and administrative (SG&A) expenses for the fourth quarter of 2004 were $73.0 million, compared with $66.3 million in the fourth quarter of 2003, an increase of 10%. For 2004, SG&A expenses were $257.4 million, compared with $242.8 million for the comparable 2003 period, an increase of 6%. The increases reflect higher headcount numbers in Biovail's U.S. sales force and the initiation of marketing programs in support of the Company's promoted products. As a percentage of total revenue, SG&A expenses were 26% in the fourth quarter and 29% for full-year 2004, compared with 33% and 29%, respectively, for the corresponding periods in 2003.
    Amortization expense in the fourth quarter of 2004 was $15.8 million, compared with $26.2 million in the fourth quarter of 2003, a decrease of 40%. Amortization expense for the full year 2004 was $65.0 million, down 54% from $140.9 million for the same period a year earlier. The significant decrease in this expense item primarily reflects the conclusion of Biovail's participating interest in generic omeprazole in early 2004.

    Specific Items Affecting Operations

    In the fourth quarter of 2004, Biovail recorded $42.2-million in non-cash charges (which impacted EPS by $0.26), related to the write-down of the remaining carrying value of the Rondec product rights ($4.4 million), and an other-than-temporary decline in the value of the Company's equity investment in Ethypharm ($37.8 million). In the fourth quarter and full-year 2004, Biovail recorded a $4.1 million and $4.2 million, respectively, non-cash equity loss (which impacted EPS by $0.03) related to the Company's investment in the Western Life Sciences Venture Fund. Financial results for the 12-month period ended December 31, 2004, also include a $1.5-million gain (which positively impacted EPS by $0.01), related to the disposal of the Cedax product rights in the third-quarter of 2004, and an $8.6-million acquired R&D charge (which impacted EPS by $0.05), related to the acquisition of the remaining interest in BNC-PHARMAPASS in the first quarter of 2004.

    Strengthened Balance Sheet

    Biovail continues to strengthen its balance sheet. In 2004, Biovail made $280 million in payments against the Company's revolving-term credit facility, completely eliminating the debt outstanding under this facility. With respect to long-term obligations, Biovail made payments of $66.3 million in 2004. The Company's debt-to-equity ratio stood at 0.5 at the end of the fourth quarter of 2004, compared with 0.9 at December 31, 2003. As at the end of February 2005, Biovail's cash balance was just under $100 million.
    Cash flows from operations were $111.7 million for the fourth quarter of 2004 and $277.1 million for the 12 months ended December 31, 2004. Capital expenditures in the fourth quarter and full year 2004 amounted to $7.8 million and $28.0 million, respectively.

    Product-Development Pipeline Progress

    In October 2004, Biovail received an Approvable Letter from the U.S. Food and Drug Administration (FDA) for a once-daily extended-release formulation of the analgesic tramadol. Earlier this week, Biovail submitted a Complete Response to the FDA's Approvable Letter. Biovail anticipates a response from the FDA in May 2005.
    In January 2005, Biovail received an Approvable Letter from the FDA for its NDA for an orally disintegrating tablet (ODT) formulation of the analgesic tramadol hydrochloride. The Approvable Letter involves the resolution of routine matters; final approval is anticipated mid-2005. A Complete Response was filed March 19, 2005 and we anticipate a response by the FDA in May 2005.
    In February 2005, the FDA issued an Approvable Letter for Biovail's ODT formulation of citalopram for depression. The Approvable Letter involves the clarification of a number of chemistry and manufacturing issues. Biovail anticipates rapidly providing this information and working with the FDA over the coming weeks and months to resolve these issues. In addition, the Letter provides revised package-insert language to reflect recent changes in the FDA's mandated labeling for the class of selective serotonin reuptake inhibitors (SSRIs) and other anti-depressants.
    In late-February 2005, Biovail, and partner Depomed, Inc. of Menlo Park, CA, received an Approvable Letter from the FDA related to the New Drug Application (NDA) for Glumetza(TM), an extended-release formulation of metformin for the treatment of Type II diabetes. The Approvable Letter indicated that Glumetza(TM) is approvable, pending the completion of discussions with regard to an issue related to finalizing one manufacturing specification. Biovail anticipates submitting a response to the FDA in the coming weeks. No clinical or labeling issues were identified in the letter.
    In other pipeline programs, Biovail expects to file a New Drug Submission (NDS) with the Therapeutic Products Directorate (TPD) in Canada before the end of March for Wellbutrin XL for the treatment of depression in adults. The application contained the results of two adequate and well-controlled trials in Major Depressive Disorder, as well as other supporting clinical data. In addition, development efforts continue for novel formulations of several products, including venlafaxine, bupropion, zolpidem, eprosartan, enalapril, and metoprolol, including combination products with application in cardiovascular medicine and metabolic diseases.
    Late last week, Flamel Technologies announced that it had ended its licensing agreement with Biovail for Genvir, a development-stage product for herpes and shingles. In April 2003, Biovail acquired the exclusive North American rights to Flamel's oral, controlled-release formulation of Acyclovir. Since that time, Biovail has had numerous interactions with the FDA concerning the clinical program that the FDA is requiring as a basis for their approval. This process culminated in a formal Special Protocol Assessment, which was received from the FDA in September 2004.
    "The hurdles that the FDA established for this program were significant, patient numbers have quadrupled, and the resultant costs for the clinical program have more than doubled relative to our estimates at the time the product was licensed," said Dr. Squires. "For these and other reasons, Biovail was in the process of discussing a separation when Flamel decided to terminate the agreement."
    In 2004, Biovail achieved several research-and-development milestones. These included the completion of four NDA filings, one NDS submission in Canada, and a supplemental NDS filing for the angina indication for Tiazac XC. With respect to approvals, Biovail received FDA approval for Cardizem LA in the treatment of angina and TPD approval for Tiazac XC in the treatment of hypertension in Canada. Biovail commercialized Tiazac XC on January 25, 2005.

    Steinbach Expansion

    In late February 2005, Biovail announced a $27.6-million expansion project to further enhance the manufacturing capability of the Company's largest manufacturing facility located in Steinbach, Manitoba, 70 kilometres southeast of Winnipeg. The expansion at Steinbach will enable Biovail to optimize the current capacity with a focus on world-class manufacturing performance, as well as to meet growing demand and opportunities. In 2004, Steinbach produced more than 1.4 billion of the over 1.6 billion dosage units made by the Company's manufacturing facilities; the others are in Dorado and Carolina, Puerto Rico. In 2003, Steinbach produced just over 600 million dosage units.

    Enhanced Corporate Governance

    Biovail's Board of Directors is actively engaged with management in a comprehensive review of Biovail's corporate-governance practices. This action reflects a commitment made by Chairman Eugene Melnyk in June 2004 to enhance investor confidence in the Company. To this end, Biovail has engaged the services of renowned corporate-governance expert Carol Hansell of the law firm Davies Ward Phillips & Vineberg LLP. Among the initiatives announced to date include the separation of roles of Chairman and Chief Executive Officer; a review of Board structure, its composition, processes, practices and recruitment; a succession process designed to ensure the ongoing renewal of its Board; and the adoption of voting to elect individual directors, thereby eliminating traditional 'slate voting'. Additional initiatives reflecting the governance priorities of Biovail's shareholders will be announced shortly.

    Conference Call

    Biovail management will host a conference call and Webcast on Thursday, March 10, 2005, at 8:30 a.m. EST for Company executives to discuss fourth-quarter and 2004 year-end financial results. Following the discussion, Biovail executives will address inquiries from research analysts.
    A live Webcast of this call will be available through the Investor Relations section of the Biovail Web site at www.biovail.com. To access the call live, please dial 416-405-9310 (Toronto and International callers) and 1-877-211-7911 (U.S. and Canada). Listeners are encouraged to dial in 10 minutes before the call begins to avoid delays.
    A replay of the conference call will be available until 7 p.m. EST on Thursday, March 17, 2005, by dialing 416-695-5800 (Toronto and International callers) and 1-800-408-3053 (U.S. and Canada), using access code, 3140863.

    About Biovail Corporation

    Biovail Corporation is an international full-service pharmaceutical company, engaged in the formulation, clinical testing, registration, manufacture, sale and promotion of pharmaceutical products utilizing advanced drug-delivery technologies.
    For further information, please contact Ken Howling at 905-286-3000 or send inquiries to ir@biovail.com.

    "Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995

    To the extent any statements made in this release contain information that is not historical, these statements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We have based these forward-looking statements on our current expectations and projections about future events. Our actual results could differ materially from those discussed in, or implied by, these forward-looking statements. Forward-looking statements are identified by words such as "believe", "anticipate", "expect", "intend", "plan", "will", "may" and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. Forward-looking statements include, but are not necessarily limited to, risks and uncertainties, including the difficulty of predicting U.S. Food and Drug Administration and Canadian Therapeutic Products Directorate approvals, acceptance and demand for new pharmaceutical products, the impact of competitive products and pricing, new product development and launch, reliance on key strategic alliances, availability of raw materials and finished products, the regulatory environment, the outcome of legal proceedings, fluctuations in operating results and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission and the Ontario Securities Commission. Biovail undertakes no obligation to update or revise any forward-looking statement.

BIOVAIL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (All Dollar amounts are expressed in thousands of U.S. dollars, except per share data) (Unaudited)

Three Months Ended Twelve Months Ended December 31 December 31 -------------------- -------------------- 2004 2003 2004 2003 --------- ---------- --------- ----------

REVENUE Product sales $265,679 $ 168,269 $841,446 $ 632,898 Research and development 7,621 3,424 20,452 14,239 Co-promotion, royalty and licensing 4,579 28,042 24,645 176,585 --------- ---------- --------- ---------- 277,879 199,735 886,543 823,722 --------- ---------- --------- ---------- EXPENSES Cost of goods sold 65,250 50,633 228,278 139,456 Research and development 19,024 26,143 70,493 86,570 Selling, general and administrative 73,029 66,335 257,407 242,771 Amortization 15,807 26,245 64,976 140,895 Write-down of assets, net of gain on disposal 42,156 45,081 40,685 45,081 Acquired research and development - 22,111 8,640 124,720 Extinguishment of royalty obligation - 61,348 - 61,348 Settlements - - - (34,055) --------- ---------- --------- ---------- 215,266 297,896 670,479 806,786 --------- ---------- --------- ---------- Operating income (loss) 62,613 (98,161) 216,064 16,936 Interest income 277 1,272 1,034 7,165 Interest expense (9,637) (10,392) (40,104) (40,421) Foreign exchange gain (loss) 594 (4,413) (564) (14,007) Other expense (4,052) (1,644) (6,486) (938) --------- ---------- --------- ---------- Income (loss) before provision for (recovery of) income taxes 49,795 (113,338) 169,944 (31,265) Provision for (recovery of) income taxes 3,750 (17,300) 8,950 (4,000) --------- ---------- --------- ---------- Net income (loss) $ 46,045 $ (96,038) $160,994 $ (27,265) --------- ---------- --------- ---------- --------- ---------- --------- ----------

Diluted earnings (loss) per share $ 0.29 $ (0.60) $ 1.01 $ (0.17) --------- ---------- --------- ---------- --------- ---------- --------- ----------

Diluted weighted average number of common shares outstanding (000s) 159,349 158,768 159,258 158,516 --------- ---------- --------- ---------- --------- ---------- --------- ----------

BIOVAIL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (All dollar amounts are expressed in thousands of U.S. dollars) (Unaudited)

December 31 ----------------------- 2004 2003 ----------- ----------- ASSETS Cash and cash equivalents $ 34,324 $ 133,261 Other current assets 280,327 279,191 Long-term investments 68,046 113,546 Property, plant and equipment, net 186,556 173,804 Goodwill 100,294 100,814 Intangible assets, net 978,073 1,049,475 Other assets, net 63,440 72,683 ----------- ----------- $1,711,060 $1,922,774 ----------- ----------- ----------- -----------

LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities $ 190,237 $ 262,568 Long-term obligations 445,471 764,111 Other long-term liabilities 21,439 14,500 Shareholders' equity 1,053,913 881,595 ----------- ----------- $1,711,060 $1,922,774 ----------- ----------- ----------- -----------

BIOVAIL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (All dollar amounts are expressed in thousands of U.S. dollars) (Unaudited)

Twelve Months Ended December 31 ----------------------- 2004 2003 ----------- -----------

CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ 160,994 $ (27,265) Adjustments to reconcile net income (loss) to net cash provided by operating activities Depreciation and amortization 88,307 157,317 Amortization of deferred financing costs 4,322 2,975 Amortization of discounts on long-term obligations 3,218 6,562 Write-down of assets, net of gain on disposal 40,685 45,081 Acquired research and development 8,640 124,720 Equity loss 4,179 1,010 Other 6,920 4,883 Changes in operating assets and liabilities (40,175) (33,304) ----------- ----------- Net cash provided by operating activities 277,090 281,979 CASH FLOWS FROM INVESTING ACTIVITIES (42,263) (278,446) CASH FLOWS FROM FINANCING ACTIVITIES (334,526) 72,523 Effect of exchange rate changes on cash and cash equivalents 762 1,125 ----------- ----------- Net increase (decrease) in cash and cash equivalents (98,937) 77,181 Cash and cash equivalents, beginning of period 133,261 56,080 ----------- ----------- Cash and cash equivalents, end of period $ 34,324 $ 133,261 ----------- ----------- ----------- -----------

--30--SLB/cl*

CONTACT: Biovail Corporation Kenneth G. Howling, 905-286-3000

KEYWORD: INTERNATIONAL CANADA INDUSTRY KEYWORD: PHARMACEUTICAL MEDICAL BIOTECHNOLOGY EARNINGS CONFERENCE CALLS SOURCE: Biovail Corporation

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